Transportation

Are Airlines Shrugging Off Boeing With Q4 Earnings?

Chris Lange

Published: January 23, 2020 11:20 am

Last Updated: January 30, 2020 10:49 am

The airline industry has faced some hurdles over the past few months in the drama surrounding Boeing’s 737 Max aircraft. With these aircraft off the table, filling out fleets has been a limiting factor for airlines across the board. Despite this setback, this quarter saw a couple major airlines rise above these challenges and post record quarterly numbers.

24/7 Wall St. has put together a brief summary on each of the three major airlines that reported earnings on Thursday before the opening bell. We have included some of the highlights from each report, as well as what analysts were forecasting and a recent trading history.

American Airlines Group Inc. (NASDAQ: AAL) said that it had $1.15 in earnings per share (EPS) and $11.3 billion in revenue, which compares with consensus estimates of $1.14 in EPS and revenue of $11.31 billion. The same period of last year reportedly had EPS of $0.97 on $10.94 billion in revenue.

During the quarter, passenger revenue per available seat mile (ASM) grew 0.9%, a record for the fourth quarter. Cargo revenue was down 18.3%, due primarily to a 15.6% decline in cargo volume. Other revenue was up 5.4%, due primarily to higher loyalty revenue.

Fourth-quarter total revenue per ASM increased by 0.5% compared to the fourth quarter of 2018 on a 2.9% increase in total available seat miles. Cost per ASM was down 0.8% from fourth-quarter 2018. Excluding fuel and net special items, consolidated fourth-quarter cost per ASM was up 2% year over year.

JetBlue Airways Corp. (NASDAQ: JBLU) posted $0.57 in EPS and $2.03 billion in revenue for its fourth quarter. Analysts had called for $0.55 in EPS and $2.03 billion in revenue. In the same period of last year, the company said it had $0.50 in EPS and $1.97 billion in revenue.

Revenue per ASM declined 2.7% year over year. This decline is largely in line with the firm’s updated guidance range of −3.5% to −1.5%.

Operating expenses per ASM, excluding fuel, were flat year over year, at the midpoint of the guidance range of −1.0% to 1.0%. Compounding benefits of the Structural Cost Program were the main driver.

Southwest Airlines Co. (NYSE: LUV) reported $0.98 in EPS and $5.73 billion in revenue. Analysts expected to see $1.09 in EPS and $5.72 billion in revenue. The fourth quarter of last year had $1.17 in EPS and $5.7 billion in revenue.

Fourth-quarter operating revenue per ASM increased 1.3% year over year, driven primarily by another strong performance from the Rapid Rewards loyalty program, as well as a passenger revenue yield increase of 1.5%, offset slightly by a load factor decline of 0.4 points, to 83.1%.

Total operating expenses per ASM increased 4.6%, as compared with fourth-quarter 2018.

American Airlines stock was last seen trading down 1% at $26.98, in a 52-week range of $24.23 to $37.23. The consensus price target is $36.17.

JetBlue stock traded up nearly 4% at $20.53 a share, in a 52-week range of $15.60 to $20.64.

Southwest Airlines stock was up 2% at $54.62, in a 52-week range of $47.40 to $58.77. The consensus price target is $58.61.